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‘CONSUMER electronics’ is loosely defined as equipment that people buy
with their own money, for use in or around the home, mainly for entertainment.
It covers the TVs, videos and audio systems that have made the Japanese
electronics industry so successful. But another term will soon be needed
in the world of electronics to express the latest changes that Japan is
trying to bring about to stay on top. New catch phrases, such as ‘human
electronics’, have already been coined to describe Japan’s move to automate
our lifestyles.

Most people who want and can afford audio, video and TV equipment already
own it. They do not have the space, the desire or the need for more electronic
gadgets unless these products can perform some completely new and desirable
function – and the Western world is running out of new and desirable functions.
Japanese electronics companies foresaw the saturation in the early 1980s,
when they began to look for alternatives to traditional consumer electronics.

They turned their attention to industrial video, such as high-definition
TV; to business electronics, such as fac simile machines and portable personal
computers; and to telecommunications technology, particularly portable tele
phones. Soon consumers will be encouraged to automate the electronic aids
in their homes. This could mean devices to control microwave ovens by telephone,
and office electronics to help with housework as well as to enable employees
to work from home. Electronics companies in Japan know where they are going;
most firms in the West look as though they have no option but to follow.

Next week, business executives from the European electronics industry
gather in London to hear how their counterparts in Japan have been so successful.
Representatives of NEC, Sony and Matsushita will lecture on the manufacture
of electronics equipment and components. In the process, they will determine
the industry’s objectives for the next decade.

Ten years ago the idea of a conference called ‘The Japanese Electronics
Industry and Britain’, and jointly sponsored by the Confederation of British
Industry and the Electronics Industries Association of Japan, would have
been unthinkable. The Japanese electronics industry was then seen as the
enemy of Western manufacturers. In May 1977, 200 protestors faced visitors
to Hitachi’s suite at the annual consumer electronics trade show in London.
These demonstrators said the company’s plan to set up a TV factory in Britain
threatened around 5000 jobs in the country’s own industry. Hitachi promptly
scrapped that plan. But by 1984 it had taken over GEC’s TV factory in South
Wales, cut the workforce by 40 per cent and begun its climb to pre-eminence
in Europe with Sony, Matsushita and Toshiba. The European electronics industry
has no option now but to hear where it went wrong and to listen to advice
for the future.

The same seems to be true in the US. Early this year the Economic Policy
Institute in Washington DC published a report entitled The Consumer Electronics
Industry and the Future of American Manufacturing. The authors wrote: ‘In
one branch of electronics after another, US firms have failed to achieve
commercial advantage from technical innovation, while the Japanese and the
newly industrialised countries of Asia have caught up with and in many instances
surpassed their US rivals. This pattern is repeated in cases where the technology
is stable – toasters, radios and irons – and where technology is changing
rapidly – TVs, video recorders, semiconductors and computers.’

In 1979, Japanese companies had 23 consumer electronics factories in
Western Europe, of which five were in Britain, and 42 in the US. They now
own more than 40 factories in Europe making consumer electronics, as well
as more than 20 making industrial electronics and more than 30 producing
electronics components. Britain is the favourite base, with more than 30
Japanese factories. West Germany is fast catching up. In the US and Canada,
the total number of Japanese factories is well over 100.

Home-Made Consumerism

The West still dominates the market for specialist hi-fi equipment,
which lacks the demand to warrant Japan’s mass-production techniques, and
for loudspeakers, which are too expensive to freight across the world. But
most other audio equipment is made in the Far East. Likewise, Japan dominates
the mass market for TV sets; there is not a single British-owned TV factory
left in business.

Japan’s consumer electronics industry has been so successful because
it has been able to use its voracious domestic market as a proving ground
for new products. Shortage of space in Japan means homes are small. In the
major conurbations, money that a Westerner spends on moving into a larger
place to live goes on gadgetry to make life in a tiny flat more enjoyable.
In Tokyo and Osaka, the two main industrial cities, the districts of Akihabara
and Namba respectively have dozens of shops and multistorey department stores
that offer identical electronic gadgetry at the same prices. Shoppers can
buy anything from a microchip to heated toilet seats, as well as all the
latest hi-fi, video and TV equipment.

This presents a wonderful opportunity to assess consumers’ tastes. Ten
years ago, the industry tried to establish a compact hi-fi system based
on the microcassette, which Olympus had developed for dictation. But the
Japanese public quickly turned it down and the microcassette remains a dictation
tool. The moving parts are so small that they have insufficient inertia
to give the smooth motion needed for the reproduction of hi-fi sounds. As
a result, the microcassette stereo system was never launched in the West,
and it soon disappeared from Japanese shops.

But now even Japanese consumers are being more choosy, refusing to buy
electronics equipment just for the sake of having the very latest gadget
on the market. In 1970, 35 per cent of the industry’s production was aimed
at the consumer; last year, it was close to 20 per cent.

The industry accepts that the trend identified in the domestic market
has already begun to influence its international sales and that it needs
to respond. As fewer video recorders are sold, the logical development in
home entertainment is digital recording of sound and pictures. Anyone who
uses a home computer is already routinely making digital copies of text,
data and program information. The sound on a compact disc is already recorded
as digital code rather than as the analogue waveform on a vinyl LP, cassette
or video. Working prototypes of digital recorders exist and the technology
to mass-produce them is ready, and yet consumers can still make only an
analogue copy of a digital CD, and an analogue recording of a radio or TV
programme. Sony plans to launch a digital tape recorder but the company
says the new technology is for use in dictation machines only, not for taping
music (‘Midget machine puts recording on a new track’, Technology, 3 February).
The reason is a political one.

The single most important advantage of digital technology is that it
enables signals to be copied or ‘cloned’ any number of times without degradation,
and without the need to set level controls to prevent distortion. This would
certainly attract the attention of consumers, but it is what the record
producers and film makers fear most. They say that digital recording systems
will make home copying too easy and they have done everything possible to
block sales, or at least to hinder and delay a concerted sales campaign
(‘A record for the compact disc’, New ÐÓ°ÉÔ­´´, 22 July 1989).

And so just when it most needs a new generation of radically different
products, the Japanese industry cannot sell what it has developed to fill
the gap. This has had the effect of accelerating the industry’s efforts
at broadening its scope into ‘human electronics’, a phrase coined to describe
the drive to automate our lifestyles.

Sony is trying to create a market for ‘personal video’, which the company
sees as the next step from personal stereo and personal computing. Homes
may become cluttered but there is still room left in a briefcase, suitcase
or jacket pocket. Sony says that personal video will create a new lifestyle;
people will watch feature films in colour on portable video-tape players
with small liquid-crystal screens and hi-fi stereo headphones. First-class
passengers on some transatlantic flights can already borrow these players
with a choice of films. Railway commuters could use similar units to watch
TV programmes, recorded the night before, on the way to work in the morning.
Commuters in New York are being offered the opportunity to hire the players
for train journeys. As the price comes down from several hundred pounds
apiece, the units could become popular in the classroom.

In the meantime, Sony has a battle on its hands. When the company launched
the Walkman personal stereo 10 years ago and created a new lifestyle, every
electronics company followed suit. There was no conflict because the cassette
was a standard one: this is not the case with Sony’s concept of Personal
Video, which uses an 8-millimetre video cassette, similar in size to a conventional
audio cassette, to hold up to three hours of colour TV pictures and digital
stereo sound. Sony developed the format for portable camcorders, the video
recorders that, like cameras, are small enough to hold in one hand.

Most of Sony’s competitors chose to make camcorders that use the 12.5-millimetre
VHS video format, which is the size of a typical paperback book. A VHS cassette
is far too large to fit in a pocket player, and its miniature version, called
VHS-C for ‘compact’ and about the size of Sony’s Personal Video cassette,
cannot run for more than 90 minutes. The VHS manufacturers are trying to
extend the playing time of their miniature cassette to 2 hours, so that
it can store a feature film. Until they succeed, it is in their interest
to try to block the commercial success of Sony’s format.

Besides devising new gadgets, the Japanese electronics industry is also
blurring the dividing line between consumer and industrial products. Mass
production and the integration of complex circuits onto microchips brings
down prices. Japanese firms have exploited these factors to make standard
office equipment and facsimile machines cheap enough for the home. To do
this they have concentrated some of their resources on the production of
raw components, especially integrated circuits. Chips now come with everything,
from toasters to bombs; there is a semiconductor in every piece of electronics
equipment.

Last year Akio Morita, the founder of Sony, upset the American public
when he wrote that the Pentagon’s missiles rely on Japanese microchips for
their guidance systems. His statement, in the Japanese-language tract The
Japan That Can Say No, was incontestable, however. And Japanese firms have
been so successful that Western computer companies, for instance, are now
obliged to sub-contract the production of their portable machines to them.
No Western company makes facsimile machines. Philips, the giant Dutch electronics
group, admits it can make money from the boom in sales of facsimile machines
only by buying ready-made units from Japan and sticking its logo on them.

The struggle by Western manufacturers to compete with Japanese firms
has now become a tussle among governments vying for the site of the next
Japanese factory. The purpose of offering cash and tax incentives to firms
with their bases in one of the world’s richest countries is to create new
jobs and to attract expertise. But there is little evidence that the exchange
works. A statement from Matsushita, the world’s biggest electronics firm,
helps to explain why. According to the manager of its factory at Sendai,
where automated production equipment is tested: ‘We have built factories
in countries like Singapore, where labour is cheap. But now labour costs
are rising. So we have to export equipment to automate the production line
if we are to remain competitive.’

Japan’s ability to automate mass-production now extends to the manufacture
of precision, miniaturised mechanics. Matsushita’s fully automated factory
near Okayama makes half a million head drums for video recorders every month.
Each aluminium drum is produced to a 2-micrometre accuracy and a machine
winds the coil for the head, giving 24 turns to wire that is just 40 micrometres
thick, thinner than a human hair.

Western governments live in hope that Japan will start to export basic
research facilities, and thereby create job opportunities for graduate scientists
and engineers. Five years ago, Shigeru Hayakawa, Matsushita’s senior managing
director in charge of R&D, made world news by promising that his firm
would open a research centre in Europe. The commitment is still unfulfilled.
‘We have been thinking about this,’ said Hayakawa last year. ‘But we do
not have any definite plans. We have an intention, but we do not know where,
when or what form the centre will take.’

One route may be through collaboration with Philips. The Dutch company
has been working with Matsushita since the early 1950s and the pair seem
keen to exploit the link more fully. Last year they agreed to cooperate
on two new technologies for the 1990s.

One of these is the interactive compact disc, or CDI, which allows users
to extract information from a vast store of data. One 12-centimetre disc
stores a flexible mix of stereo music, mono speech, computer text, stationary
graphics, cartoon animation, high-quality still pictures and, eventually,
moving video sequences. A computer program controls the data and helps a
modified CD player to unravel the mix. Over the next two years, first to
the professional market and then to home owners, CDI will be used to disseminate
business information, encyclopedias, educational material and video games.
Philips invented the system 10 years ago and immediately interested the
Japanese electronics industry in developing the technology.

Philips has also joined forces with Matsushita to develop a new system
for automating electronics at home, known as domestic digital bus, or D2B.
The standard for the system is supported by Thomson in France and Sony in
Japan. The group says it is compatible with previous proposals made both
in Europe and Japan.

Early attempts at selling the public the idea of home automation have
failed for two main reasons: the lack of standardisation and the notion
that it was unnecessary. The industry saw home automation as a way of controlling
domestic appliances, such as central heating, lighting, air conditioning
and kitchen equipment, from a central computer. A domestic TV screen would
provide reports on how the system was running and warnings of imminent failures.
There would also be a TV camera at the front door, which would provide an
image of callers in the corner of the screen, and a device to give the viewer
a chance to open the door by remote control. Sanyo, another Japanese electronics
company, even went so far as to demonstrate a system that allowed a householder
to telephone the computer at home, and give it verbal instructions to switch
on the oven, close the curtains and run a bath. But consumers were not impressed.
The only flicker of interest has been in various proprietary (and thus incompatible)
systems that let householders listen to one hi-fi, and watch several TVs,
all in different rooms, under the control of a single hand-held commander.

The D2B system will now be built into audio, video and TV equipment
to guide users through the process of installation, tuning in and everyday
use. The designer’s dream is that future electronics equipment for the home
will be sold without an instruction book.